Gold prices surged to a record high of $3,128.06 an ounce on Monday, driven by heightened investor anxiety over global trade tensions and the looming threat of U.S. President Donald Trump’s tariff plans.
This unprecedented rally positions gold for its biggest quarterly gain in over 38 years, with a more than 18% increase in the first quarter of 2025.
Key Drivers of Gold’s Rally
1. Trade tensions: The escalating trade tensions between the U.S. and other countries, including China and the European Union, have fueled investor demand for safe-haven assets like gold.
2. Interest rate cut speculation: Expectations of a potential interest rate cut by the Federal Reserve have also contributed to gold’s rally, as lower interest rates can make gold more attractive to investors.
3. Central bank purchases: Aggressive central bank purchases and robust demand for exchange-traded funds (ETFs) linked to gold have further amplified its appeal.
Market Expectations
Analysts predict that gold’s price trajectory could shift if the tariff measures announced this week prove less severe than anticipated, triggering profit-taking from recent highs.
However, the ongoing trade tensions and geopolitical instability are expected to continue supporting gold’s rally in the coming months.
Forecasts and Projections
Major financial institutions have issued optimistic forecasts for gold’s future, with Bank of America raising its gold price target to $3,500 by 2027.
Goldman Sachs anticipates gold ending the year at $3,300 per ounce, while Société Générale aligns its forecast for 2025 with a similar target.
Source: Nairametrics
